Key Takeaways:
- Crypto exchange Binance restricted accounts of some Nigerian users to ensure security of the platform for traders.
- Bans and restrictions, historically, have failed to stop crypto’s growth.
NEW DELHI (CoinChapter.com) — The world’s largest cryptocurrency exchange Binance (BNB), restricted the personal accounts of as many as 281 Nigerian users. As per Bloomberg, Binance decided to comply with anti-money laundering regulations and ensure the platform’s security for traders.
In a statement on the website, Binance’s CEO, Changpeng Zhao, apologized to users for the delays in resolving the customer support requests. He further added that protection mechanisms, such as KYC, collaboration with law enforcement, etc., are in place to protect the community from fraudulent activity.
Some 281 Nigerian accounts have been affected by these personal account restrictions with approximately 38% of these cases restricted at the request of international law enforcement.
Excerpt from Binance’s announcement
The announcement also stated that 38% of the 281 suspended Nigerian accounts were to comply with requests from international law enforcement.
However, history suggests bans and restrictions have not been very successful in halting the stride of cryptocurrencies or dampening the resolve of crypto loyalists.
Crypto Bans: Roadblocks…
Bans usually are not very effective when it comes to cryptocurrencies. For example, the Reserve Bank of India (RBI) had virtually banned cryptos in India in 2018. As a result, the interest in digital assets plummeted.
Also Read: Liquidity Holes create bear traps for speculative Equities and Bitcoin.
However, after the Supreme Court trashed the RBI curb in 2020, the country now has the highest number of crypto users globally, with more than 100 million people trading or investing in cryptocurrency.
Another example would be China. The country first banned cryptocurrencies in 2013, prohibiting banks from handling transactions in Bitcoin. Then, in 2017, China outlawed initial coin offerings that startups used to raise funds.
Last year, the Chinese government cracked down on Bitcoin mining and trading. As a result, crypto prices took a hit, and markets crashed in May 2021. Furthermore, Bitcoin’s hash rate dropped by more than 50% in the days following the crypto ban.
At present, rumors abound about the possibility of a bill banning cryptocurrencies in India. In addition, Russia’s central bank has called for a ban on the use and mining of cryptocurrencies.
… Or Just A Speedbump?
Despite the bans and restrictions, crypto trading and mining thrived. For example, Chinese traders used exchanges not headquartered in mainland China, thus abiding by the rules laid down in the ban.
In addition, after China banned mining, Bitcoin miners scattered across the globe. Most users chose to settle in the US, as data from the Cambridge Bitcoin Electricity Consumption Index shows.
Kazakhstan also hosted some miners. Meanwhile, the total Hash rate, which lost half of its value after the ban, has pared all its losses.
These examples highlight how cryptocurrency users would find a way around bans and restrictions. Although better security, environmental issues, power consumption, etc., are often cited as an excuse, most governments fear the crypto sector as it may threaten the current monetary system.
Also Read: Joe Rogan-cryptocurrency industry could be the key to a decentralized future.
China’s miner exodus might have slowed down the crypto market, but it failed to stop the disruptive sector’s progress. Meanwhile, more than 100 million users would be left stranded if India bans cryptocurrencies.
The move, which the Indian government believes would help curb money laundering and terror financing, may likely force users to turn to the black market. Additionally, users would still have the option to trade crypto-to-crypto, as per rumors.
In the case of Nigeria, Binance’s decision to ban certain users to comply with regulatory bodies might not be much of a deterrent. Nigerians continue to use virtual currencies against inflation, as well as to remit money.
Nigerian traders could move to other exchanges or take their crypto belongings to other crypto-friendly locations. As such, bans and restrictions have proved to be minor setbacks for the crypto industry, and Binance’s ban on Nigerian crypto users would likely amount to the same.
